Asia Fuel Oil-HSFO market could weaken further on Russian supply influx

SINGAPORE, July 6 (Reuters) - The high sulphur fuel oil market could weaken further in July as more supplies of Russian barrels find their way into Asia, traders and analysts said this week. Reflecting this, cash differentials for HSFO in Asia have continued to stagnate in steady discounts. The 380-cst HSFO cash differential was at a discount of $2.37 a tonne to Singapore quotes on Wednesday, versus a discount of $2.33 the previous day. The market structure for HSFO was also unlikely to recover into a firm backwardation as ample prompt supplies are set to arrive in the coming weeks. "We expect the market structure to weaken further towards the second half of July with expectations of a potential deluge of Russian-origin cargoes arriving in Fujairah and then flowing to Southeast Asia," Refinitiv Oil Research analysts said in a note this week. The balance-month/August timespread for 180-cst HSFO was pegged at a contango of $3 a tonne at the Asia close (0830 GMT) on Wednesday, while that for 380-cst HSFO was pegged at parity, Refinitiv data showed. FUJAIRAH INVENTORIES Fujairah Oil Industry Zone (FOIZ) inventories for heavy distillates and residues rose 14% from the previous week to 12.62 million barrels (1.99 million tonnes) in the week ended July 4, latest data via S&P Global Commodity Insights showed. The weekly inventory count for heavy distillates was at a year-to-date high. OTHER NEWS - Oil prices rose on Wednesday, clawing back some of Tuesday's heavy losses as supply concerns returned to the forefront and outweighed lingering worries over a global recession. - China has issued a batch of refined fuel export quotas at 5 million tonnes, sources told Reuters on Wednesday, which would allow refiners to cash out solid exports margins and help ease tight fuel supply in global market. - Shares in Mitsui & Co and Mitsubishi Corp, investors in the Sakhalin-2 gas and oil project, tumbled on Wednesday as tensions between Moscow and Tokyo ratcheted higher with former Russian president Dmitry Medvedev threatening that Japan could be cut off from Russian gas and oil. - The first Venezuelan crude cargoes sent to Europe in two years helped lift the OPEC nation's oil exports by 61% last month after a series of setbacks earlier in the year, tanker tracking data and documents from state-run PDVSA showed. WINDOW TRADES - HSFO: One 180-cst trade - VLSFO: One 0.5% VLSFO trade ASSESSMENTS FUEL OIL CASH ($/T) ASIA CLOSE Change Prev RIC Close Cargo - 0.5% VLSFO 946.23 -76.77 1023 Diff - 0.5% VLSFO 74.62 -1.36 75.98 Cargo - 180cst 519.55 -32.33 551.88 Diff - 180cst -2.70 0.12 -2.82 Cargo - 380cst 480.88 -34.33 515.21 Diff - 380cst -2.37 -0.04 -2.33 Bunker (Ex-wharf) Premium - 380cst 4.87 0.73 4.14 Bunker (Ex-wharf) Premium - 0.5% VLSFO 88.00 -2.00 90.00 For a list of derivatives prices, including margins, please double click the RICs below. Brent M1 180cst M1 180cst M1/M2 180cst M2 Visco M1 Visco M2 380cst M1 380cst M1/M2 380cst M2 Cracks 180-Dubai M1 Cracks 180-Dubai M2 East-West M1 East-West M2 Barges M1 Barges M1/M2 Barges M2 Crack Barges-Brent M1 Crack Barges-Brent M2 (Reporting by Jeslyn Lerh; Editing by Maju Samuel)